Floor Covering Weekly March 24, 2014 : Page 1

Vol. 63 No. 6 A Hearst Business Publication March 24, 2014 $4 4 F LOOR C OVERING W EEKLY The Industry’s Business News & Information Resource 2014 WINNERS Industry veteran Spirer acquires Max Windsor By Santiago Montero [Adairsville, Ga.] Peter Spirer, along with a group of private investors, has purchased Max Windsor Floors, a manufacturer of hard-wood floors imported to the U.S. from China. The new company will move its headquarters from Rancho Cucamonga, Calif. to Adairsville, Ga. where it has opened a central distribution center but will also maintain an office in Com-merce, Calif. to be closer to existing customers. Spirer’s goal is a lofty one: “We want to be the most profitable line in any retailer's store.” In Max Windsor, he thinks he’s found the organization that can help him do just that. First is size. “Our size provides flexibility and gives us greater opportunity to make the right things happen for our customers. We can't do many of the things the big guys can, but the things we choose to do, we can usually do better,” he told FCW . One of those things will be reflected in its commitment to specialty retail. When asked if he will “go after” big box sales, his answer is a blunt, “No way.” He added, “We are making our stand with the flooring retailer. Period. The boxes are kill-ing specialty retail that needs the help of their suppliers to do a better job of competing. As an industry, we are feeding the monsters that have established their supremacy and dictate pricing and policies to even the biggest of these Peter Spirer suppliers. By being complicit, the big mills are destroying flooring retailers. They don't mean to, but they live for the next big order, and the one after that. The result of this has been tremendously damaging for the neighborhood retailer. We need him. He's the backbone of the industry.” The company has also set is sites on expand-ing outside of the western U.S. and is seeking the help of distribution in certain markets to do so. This is a change from its exclusively retailer-direct practice of the past. “There are markets where one step distribution is difficult to the point of pointlessness,” he said. “These Core strengths drive USFloors: Sourcing, sustainability, innovation By Mallory Cruise [Dalton] The guiding principles that led to the creation of USFloors — to make sustain-able and unique flooring — have not changed in the 13 years since the company was founded by charismatic president and CEO Piet Dossche. On its way to fulfilling that original vision, the company that became the first U.S. bamboo manufacturer and one of very few domestic cork producers can also boast of owning one of the largest array of photovoltaic cells in the state of Georgia, and providing a range of uniquely sustainable and differentiated products Piet Dossche from all over the world. “Having a mission statement and a vision is what sets you apart in a crowded market,” said Dossche. “And for us it’s been a combination of unique products and floor covering solutions that we wanted to bring to market in a sustainable way.” Continued on page 28 Continued on page 28 2014 & THE GREEN ISSUE PINNACLE Periodical 6 9 12 PRACTICE & PROCESS PROMOTION & COMMUNICATION For breaking news updated each business day, visit us online at www.fcw1.com PRODUCT 14

Industry veteran Spirer acquires Max Windsor

Santiago Montero

[Adairsville, Ga.] Peter Spirer, along with a group of private investors, has purchased Max Windsor Floors, a manufacturer of hardwood floors imported to the U.S. from China. The new company will move its headquarters from Rancho Cucamonga, Calif. to Adairsville, Ga. where it has opened a central distribution center but will also maintain an office in Commerce, Calif. to be closer to existing customers.

Spirer’s goal is a lofty one: “We want to be the most profitable line in any retailer's store.”

In Max Windsor, he thinks he’s found the organization that can help him do just that. First is size. “Our size provides flexibility and gives us greater opportunity to make the right things happen for our customers. We can't do many of the things the big guys can, but the things we choose to do, we can usually do better,” he told FCW.

One of those things will be reflected in its commitment to specialty retail. When asked if he will “go after” big box sales, his answer is a blunt, “No way.”

He added, “We are making our stand with the flooring retailer. Period. The boxes are killing specialty retail that needs the help of their suppliers to do a better job of competing. As an industry, we are feeding the monsters that have established their supremacy and dictate pricing and policies to even the biggest of these suppliers. By being complicit, the big mills are destroying flooring retailers. They don't mean to, but they live for the next big order, and the one after that. The result of this has been tremendously damaging for the neighborhood retailer. We need him. He's the backbone of the industry.”

The company has also set is sites on expanding outside of the western U.S. and is seeking the help of distribution in certain markets to do so. This is a change from its exclusively retailer-direct practice of the past. “There are markets where one step distribution is difficult to the point of pointlessness,” he said. “These markets are better served by distributors. Our strategy includes rendering unto Caesar that which is Caesar’s. Yes, we look forward to partnering with distributors in several markets.”

Ready to go
Spirer credits good leadership prior to the acquisition for the fact that there are no major problems at Max Windsor.

“The product line is one of the best around, our dealer list reads like a Who’s Who of flooring retailers and the brand enjoys a strong reputation. However, we had a service issue to deal with. When the previous owners decided they were going to sell, inventory took a hit. Anticipating that the company would be acquired, a few of our top factories got together with me to resupply. The scenario worked out with miraculous timing. Just as a large number of containers hit the docks, the purchase of Max Windsor was consummated. We’re now in an ideal inventory position.”

Spirer’s outlook for hardwood flooring is a bright one as well: Consumers prefer hardwood looks and he expects as the economy continues to expand that more households will once again find hardwood floors affordable.

Combine that with the price advantage of sourcing from China compared to U.S. manufacturers who source domestically, and Spirer thinks he can be competitive on price as well.

What will be different?
Originally Spirer came to the company as a consultant to establish a national footprint for what had been a West Coast operation. That challenge remains today. Knowing the path to that success goes through the specialty retailer is the primary reason Spirer sought out David Ciccinelli to be his vice president of marketing.

Ciccinelli, former president of Carpet land USA and one of the largest specialty retailers of its day, brings extensive retail experience and knowledge and is considered one of the top retail executives in the industry.

“Operationally, his name is synonymous with retail flooring. I know that when I speak to him, I’m speaking to someone who is reciting to me chapter and verse the problems and challenges of retailers. And those are the guiding lights of our company,” said Spirer, adding that the emphasis on dealers is the principle difference between the old company and the new.

“Everything we do from this point forward will be to get into the retailer’s point of view, to think his way, to develop programs that will make him money. Retailers have a generous heart and they will follow you and help you create a successful franchise if they see you are doing things for them,” he said.

Also joining the team will be Adrian Van Raalten, a Max Windsor sales veteran who was promoted to vice president, western region; Brian Wang, a long time Max Windsor manager is now vice president operations; and, Amanda Aberchrombie will head up operations in Georgia.

A storied career
As the visionary leader of Horizon Carpet Mills, Peter Spirer is often credited with bringing style and color to the carpet industry in a way that had never been done before. To say he fundamentally changed what fashion meant in carpet is not an exaggeration. And on the way to doing just that, he built Horizon first into a public company and then into one of the largest independent mills of its time. Horizon was acquired by Mohawk in 1992 in what was the first of many acquisitions that Mohawk was to make on its way to becoming a dominant industry force and industry consolidator.

Spirer’s background includes stints in distribution and high-end retail. Today, he remains only one of two early industry pioneers and World Floor Covering Association Hall of Fame inductees who remain active in the industry to this day — the other being legendary Shaw Industries founder Bob Shaw, currently president of Engineered Floors.

After taking some time to “watch the game from the bleachers,” Spirer jumped back into the industry as a consultant to Max Windsor where he helped take the company from a regional western player to a national provider while doubling their sales during what was one of the most difficult times in business.

Now he is ready to once again take the helm of his own company.

“I love the ingenuity at work in the sector, and the fact that small and medium size independent companies have a good shot at the brass ring. There is a lot more growth ahead for wood,” he said.

Spirer also plans on bringing more fashion to the hardwood segment. He said, “Hardwood is in its infancy as it relates to styling. In recent years there has been more excitement around coloring techniques and milling technology.

“We’re dealing with colorations that require three and four different processes that allow us to come out with beautiful color combinations,” he said, noting that these higher end products also help drive increased profitability.

Advances in printing technology as well as finishes are just some of the technological advances he’s excited about, knowing that they will contribute to the category’s overall growth as well as that of Max Windsor.

Core strengths drive USFloors: Sourcing, sustainability, innovation

Mallory Cruise

[Dalton] The guiding principles that led to the creation of USFloors — to make sustainable and unique flooring — have not changed in the 13 years since the company was founded by charismatic president and CEO Piet Dossche. On its way to fulfilling that original vision, the company that became the first U.S. bamboo manufacturer and one of very few domestic cork producers can also boast of owning one of the largest array of photovoltaic cells in the state of Georgia, and providing a range of uniquely sustainable and differentiated products from all over the world.

“Having a mission statement and a vision is what sets you apart in a crowded market,” said Dossche. “And for us it’s been a combination of unique products and floor covering solutions that we wanted to bring to market in a sustainable way.”

Sustainability has been part of USFloors’ DNA right from the beginning when Dossche recognized that this movement was starting to gain stronger momentum in the U.S.

“Europe was leading it at the time, and we were trying to become a player in the market. When I went to China I saw in bamboo flooring a fantastic ecological and sustainable product and brought this to the U.S., and later we added cork flooring to the assortment,” he said.

USFloors sources globally for its products, including from Asia, Europe and South America. Doing this, noted Dossche, provides USFloors with a wide assortment and a competitive advantage.

“We have two strategies for sourcing: we either source a product, buy it and then sell it or we source the product, buy it in an unfinished format then profile, stain and finish it at our Dalton facility. We have a strong sourcing and logistics team in our Dalton office but since most of our sourced product comes from China, our newly opened office there is playing a more important role every day,” he said.

USFloors set up a quality control office in Shanghai in October 2013. Headed up by his son Julian and daughter-in-law Rachel, and supported by a team of quality control specialists in the field, Dossche likens it to a three-legged stool that provides quality control, logistics and sourcing.

And, Dossche said, he is already seeing results. “Since they’ve been there, the quality of our products, the relationship with our suppliers, logistics and the speed of bringing product to market has improved greatly. It’s also presented an opportunity to partner with new companies. It’s been a great move and it’s strengthening our sourcing efforts and our organization overall,” he said.

Global partners
In December 2008, Amorim bought a 25 percent stake in USFloors. Being that closely linked with Amorim allows for a strong manufacturing structure and a strong supply chain for USFloors, especially since cork and bamboo are at the core of the company’s offerings, he explained.

“In 2008, we began building our manufacturing facility in Dalton, which was the first bamboo and cork manufacturing plant in the U.S. We had to make sure, because of cork being a natural product, that we had a strong supply and a guaranteed supply chain before we could manufacture here ourselves. So, we joined forces with Amorim, the largest supplier of cork product in the world, and we came to an agreement where they became a minority partner in our company,” he explained.

This partnership benefits both USFloors and Amorim, noted Dossche. “Because of our cork background, this partnership made for a perfect fit and a prosperous relationship. It helps us to continue our strength in the market,” he said. For Amorim, it is an effective way to gain a meaningful presence in the U.S. market.

Product innovation
Another core principle of USFloors is product innovation — and can be seen in such products as Corboo (a cork, bamboo hybrid), Almada cork planks, strand engineered bamboo, and its latest product introduction, COREtec Plus LVT.

“When you’re a smaller player and relative newcomer in the industry, you have to look at what your core strengths are and how you can set yourself apart from the market. We never believed in going the route of commoditized product or going after product because of price points,” said Dossche.

When it comes to product innovation, USFloors employs a multi-pronged approach. And for Dossche, being involved with product research and development is essential.

“Every product has to be innovative, unique and offer a sustainable story. It obviously also has to be competitive and, importantly, it has to solve an existing problem and provide a solution to what the market is looking for. Innovation is going to continue to be the driver of growth for the company,” he said.

One category in particular that has seen incredible product development and growth is LVT. It’s not surprising then that USFloors’ newly launched COREtec Plus line of LVT products has seen tremendous growth as well.

“For a few years now we’ve been witnessing strong growth taking place in the LVT category. We were experimenting with different constructions and in 2010 started to develop our COREtec Plus product, which we brought to the market in 2012,” he said. USFloors filed for a patent for COREtec Plus in October 2012.

“COREtec Plus is distinctive and unique because, unlike other LVT products which are constructed from 100 percent vinyl in thicknesses varying from 2 mm to 5 mm, it's made by applying a vinyl layer to an extruded core board which contains, besides other components, recycled wood and bamboo dust,” he said. “COREtec Plus is an example of where we brought a solution to the market,” he said.

COREtec Plus has the durability and look of LVT, the rigidity with ease of installation of a laminate floor, but with a waterproof core and an attached cork underlayment providing for additional benefits.

“We expect to be granted the patent in early 2014, which will give us the opportunity to further expand our COREtec Plus collection and give this product a bigger boost and footprint in the marketplace,” said Dossche.